Wednesday, December 21, 2011

Workarounds and designarounds are what Steve Jobs suggested to Google and its device makers

After a final ITC ruling banning HTC devices to the extent that they implement any of two claims of an Apple patent and a preliminary decision ("initial determination") that could result in a similar ban of Motorola devices implementing any of four claims of a Microsoft patent, both defendants reacted in very similar ways:

Motorola Mobility welcomed the fact that "the majority of the rulings were favorable to Motorola Mobility", or more specifically, "Motorola Mobility does not violate six of the seven Microsoft patents listed in Microsoft’s suit". Motorola also recalled that Microsoft had dropped two other patents during the course of the investigation. And it declares its intent to modify its products to steer clear of infringement: "The ALJ's initial determination may provide clarity on the definition of the Microsoft 566 patent for which a violation was found and will help us avoid infringement of this patent in the U.S. market."

I'll comment quickly on the point that both companies make about numbers, and go into more detail on the question of workarounds and designarounds. As my headline indicates, if the result of such a lawsuit is that someone works around the enforced patent claims, it's anything but a defeat for the plaintiff. It's perfectly in line with how Apple and Microsoft have previously commented on their Android-related lawsuits. Those two companies have very different strategies -- Apple optimizes for product differentiation while Microsoft is interested in license agreements -- but neither of them has ever said or implied that workarounds wouldn't be acceptable or wouldn't suit their strategic purposes.

Reasonable people can disagree on whether a given patent is valid (the fact that a patent office has granted a patent means very little in IT), and whether it's actually infringed by a particular technology. That's why those litigations take lots of time, huge piles of documents, and lengthy expert testimony, and cost many millions.

If a company asserts X number of patents in a given lawsuit, it can't realistically expect that all of its assertions are going to be successful. I've seen lots of patent lawsuits and rulings but never a case in which someone prevailed on multiple unrelated patents at the same time.

Between Apple and HTC on the one hand and Microsoft and Motorola on the other hand, there are already dozens of patents in play and that number could go up any moment. From the perspective of a defendant, dealing with a holder of a large patent portfolio is like fighting with the mythical Hydra: you cut off one head, and two others regrow instantly. Apple and Microsoft have plenty of ammunition in their depots. They can assert more patents not only in the United States but also in other jurisdictions (which are increasingly attractive since the ITC isn't as fast as it used to be and appears to be a rather difficult forum for patent holders to prevail in, possibly supplanting the High Court of England and Wales as the most difficult forum in the world) until the time is ripe for a settlement that makes sense to them.

What I just said presupposes one thing: they can only keep bringing new assertions as long as their adversaries don't win rulings that make a quick settlement on the basis of a cross-license a necessity. But at this stage, HTC is far away from having leverage along the lines of mutually assured destruction against Apple (to the extent that there have been decisions, they have been negative for HTC), and none of Motorola's claims against Microsoft has been adjudicated yet, so we have to wait and see what happens when their lawsuits reach the decision-making stage.

Six months ago, Nokia and Apple settled their dispute (which consisted of many lawsuits in four countries) after approximately 20 months of litigation. In those 20 months, neither party had won a decision against the other, and worse than that, neither party had even prevailed on a single patent (!) at the stage of an initial determination. By comparison, Apple's dispute with HTC started 21 months ago, and Microsoft's original complaint against Motorola was filed less than 15 months back.

These things take time, and there's a high drop-out rate, but the only way to avoid protracted, escalating litigation is to do a license deal.

In March 2010, after filing an ITC complaint and a federal lawsuit against HTC, Apple released an official statement with the following quote from Steve Jobs:

"We can sit by and watch competitors steal our patented inventions, or we can do something about it. We've decided to do something about it," said Steve Jobs, Apple's CEO. "We think competition is healthy, but competitors should create their own original technology, not steal ours."

That is still the only Apple comment on the HTC dispute. In fact, even after the ruling on Monday, a spokeswoman for Apple reiterated that position.

Not only does nothing in that statement suggest that a workaround is a negative outcome but the second part even suggests that "competitors should create their own original technology". That's exactly what a workaround, or designaround, comes down to.

His official biography states that shortly after he brought litigation against HTC, Steve Jobs met with then-Google CEO Eric Schmidt and said: "I want you to stop using our ideas in Android, that's all I want." Again, that's what HTC is now going to do with respect to the "data tapping" patent. What HTC calls a workaround sounds more like a throwout -- a complete removal of the feature rather than an alternative implementation -- but either way it's just what Steve Jobs wanted. He wanted this with a view to far more patents than one, but Apple can now try to make his vision materialize one patent at a time. Its litigation has already resulted in several modifications of competing products, particularly on Samsung's part.

Another famous quote from Steve Jobs's biography is that he was willing to "go thermonuclear war" on this and especially the following sentence: "I'm going to destroy Android, because it's a stolen product." But even that statement doesn't mean that the removal or modification of features isn't a good outcome. He didn't say he wanted to destroy Android for the sake of destruction. He said he wanted to "right this wrong", and after "destroy Android", he said "because it's a stolen product". Conversely, if Android stops using Apple's ideas, it's not "stolen" and Apple doesn't have to fight against it anymore.

Unlike Steve Jobs, Microsoft has never vowed to destroy anything. In its official statements on patent litigation, it has always stressed its willingness to extend a license on fair terms. But someone only needs a license for technologies he actually uses. If Motorola throws out the meeting scheduler feature, or implements it in alternative ways that are outside the scope of Microsoft's intellectual property, it means that both compete on a level playing field with different approaches, and customers have choice.

Competition, not copytition.

For some patents, workarounds may be possible without users even noticing a difference. In some other cases, there may be a difference but no objective difference in quality. In a third group of cases, one solution may be noticeably superior over the other. And in a fourth scenario, what is called a workaround or designaround will be the complete removal of a feature. That, too, is a kind of differentiation in the market.

Many more smartphone patent cases will go to trial and be adjudicated next year. There will be many more injunctions and bans, and there will be many announcements of workarounds and designarounds. There's nothing wrong with it in principle. Since Apple and Microsoft get countersued (both of them by Motorola, and Apple additionally by Samsung and HTC, companies that have a license agreement in place with Microsoft), we may even see them make such announcements at some point.

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About Me

Florian Mueller used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.